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The 13th Annual International Industrial Organization Conference

The 13th Annual International Industrial Organization Conference

The 13th Annual International Industrial Organization Conference promotes research on antitrust policy, regulatory policy, and competition and market power in real-world markets.

José Azarwill be presenting, “Anti-Competitive Effects of Common Ownership,” written with Isabel Tecu and Martin C. Schmalz. In this paper, using the airline industry as a laboratory, the authors provide evidence that common ownership by large diversified institutional investors has adverse effects on product market competition.

Yianis Sarafidis will present “A Model of Ordered Bargaining with Applications,” written with Serge Moresi and Steven Salop. The paper develops a bargaining model where a “buyer” (say, an HMO) negotiates sequentially with several “sellers” (say, hospital systems) to build a network. It identifies conditions under which a merger of two hospital systems is procompetitive as it allows the HMO to negotiate lower prices. The model can be applied to other industries. For example, the buyer is a credit card network and the sellers are issuing banks, or the buyer is a MVPD and the sellers are program services. A notable result is that, under some conditions, the change in the buyer’s welfare following a merger of two sellers is proportional to the change in the HHI. Thus, the paper provides a justification for gauging competitive effects concerns with the HHI in some bargaining environments.

Serge Moresi will present a paper on “Centralization vs. Delegation by a Firm that Supplies to Rivals,” co-authored with Marius Schwartz. The authors compare two organizational structures for a vertically integrated firm – Centralization and Delegation – when the firm supplies inputs also to rivals. They show that Delegation is more profitable than Centralization and, surprisingly, Delegation is used to induce more aggressive behavior by rivals. That is, Delegation reduces the integrated firm’s profit in the downstream market, but increases total input sales and upstream profits, so that on balance the integrated firm benefits from Delegation.